Erickson v. Gospel Foundation of Calif.

GIBSON, C. J.

The membership of plaintiff in defendant Gospel Foundation of California was cancelled by vote of the members, and he brought this action for declaratory relief to determine the validity of the cancellation. Plaintiff joined as defendants Mary Liddecoat and Norman E. Johnson, who are both members and directors of the Foundation, Selma C. Abnot, who was elected a member and director in plaintiff’s place, and Walter E. Webb, the general manager. He has appealed from a judgment declaring that his membership was validly cancelled and annulled.

The Foundation is a nonprofit corporation formed in 1946 under the laws of California. Its purpose is to foster, promote and operate religious, charitable, evangelistic and mission enterprises, and members are required to subscribe to a doctrinal statement which consists of tenets of a solely religious nature.

The authorized number of members of the Foundation is the same as the number of directors, which is fixed at three, and the personnel of the membership and directorship is identical. No member is to obtain any pecuniary gain or profit, and in the event of dissolution the property of the Foundation is not to go to the members but to certain named organizations.

The by-laws provide that every member is entitled to one vote and, in addition, shall have one vote for each $1,000 in money or property conveyed to and accepted by the Foundation and that all contributions shall be subject to approval and acceptance by a majority of the votes of the members. It is further provided that a membership may be cancelled and annulled by a majority vote.

The original members and directors were A. M. Johnson, Mary Liddecoat and Norman Johnson. In December, 1947, at a special meeting, the directors adopted a resolution that the Foundation accept a donation of $2,000 from Miss Liddecoat and that she be given two extra votes as provided by the by-laws. Later in December A. M. Johnson conveyed to the Foundation property valued in excess of a million dollars. At a special meeting on January 12, 1948, after the death of A. M. Johnson, plaintiff was elected a director. Plaintiff voted in favor of ratifying and approving the minutes of the prior meeting at which Miss Liddeeoat was granted two extra votes in return for her contribution. In 1950 Miss Liddeeoat became disturbed by plaintiff’s conduct and attitude toward the Foundation, and at a special meeting of members in August of that year, called to consider annulment of his membership, Miss Liddeeoat voted three votes in favor of cancellation, and Norman Johnson voted against such action. Plaintiff, although present, did not vote.

Plaintiff challenges the validity of the by-law which grants an additional vote to a member for each contribution of $1,000 accepted by the Foundation. His attack is based upon the claim that there is only one class of members in the Foundation and that the statutes require equal voting rights for all members of one class in a nonprofit corporation. At the time the Foundation was incorporated and this by-law was adopted the applicable statutes provided as follows: ‘ ‘ The authorized number and qualifications of its members, the different classes of membership, if any, the property, voting, and other rights and privileges of each class of membership, and [certain other matters] may be set forth either in the articles or in the by-laws.” (Civ. Code, §595, subd. 5, now embodied in Corp. Code, § 9301, 1st par.) The by-laws “may contain, among other things, provisions for: ... (9) The qualifications of members and different classes of memberships, and the property, voting and other rights, interests or privileges of each class. ’ ’ (Civ. Code, § 598, now embodied in Corp. Code, § 9402, subd. b.) “A nonprofit corporation shall have such memberships or classes thereof as may be specified in the articles or by-laws, but unless otherwise provided there shall be but one class of members whose rights and interests shall be equal.” (Civ. Code, § 600, 1st par., reenacted as Corp. Code, § 9602.) “Unless otherwise provided in the articles or by-laws every member of a nonprofit corporation shall be entitled to one vote and may vote or act by proxy. ... No member may cumulate his votes unless it is so provided in the articles or by-laws.” (Civ. Code, § 603, now embodied in Corp. Code, § 9601.)

The quoted sections leave no doubt that it was competent for the Foundation, as a nonprofit corporation, to provide for unequal voting rights between members of different classes. The challenged by-law comes within this authorization because it, in effect, provides for different classes of membership, with different voting rights for each class, based upon the amount of contributions made by individual members and accepted by the Foundation. It operates equally among the members of each class, and we find nothing arbitrary or unreasonable in its application. Nor, as claimed by plaintiff, does the by-law violate section 9500^* of the Corporations Code, which relates to the powers to be exercised by directors. The by-law affects only the rights of the members as such and does not regulate their powers as directors. The three directors have equal voting powers when acting in that capacity.

Plaintiff next attacks the cancellation of his membership by asserting that no charges were filed against him, that he was given no opportunity to be heard in his defense and that under such circumstances the action taken was arbitrary and capricious. The courts have recognized different rules of law relating to review of the action of an organization in expelling a member, depending on the nature of the particular group involved and the character and extent of the member’s interest. For example, it has been held that one may not be expelled from an organization such as a labor union or a mutual benefit society, where property rights are attached to membership, without notice and a reasonable opportunity to defend against the charges made. (Cason v. Glass Bottle Blowers Assn., 37 Cal.2d 134, 142 et seq. [231 P.2d 6]; Taboada v. Sociedad Espanola de Beneficencia Mutua, 191 Cal. 187, 191 et seq. [215 P. 673, 27 A.L.R. 1508].) [4] The courts have always been reluctant to interfere with actions taken by religious organizations with respect to their internal affairs, and it has been commonly held that the expulsion of a member by a proper tribunal of such an association will not be reviewed where no property right is involved. (See Bouldin v. Alexander, 15 Wall. (U.S.) 131, 139-140 [21 L.Ed. 69]; First English L. Church v. Evangelical L. Synod, 135 F.2d 701, 703; Mount Olive Primitive Baptist Church v. Patrick, 252 Ala. 672 [42 So.2d 617, 618-619] ; Ballew v. Deal, 209 Ga. 609 [70 S.E.2d 767, 768-769] ; Kauffman v. Plank, 214 Ill.App. 306, 310; King v. Smith, 106 Kan. 624 [189 P. 147, 148] ; Jenkins v. New Shiloh Baptist Church, 189 Md. 512 [56 A.2d 788, 791-793] ; Murr v. Maxwell, (Mo.App.) 232 S.W.2d 219, 232-237; Leeds v. Harrison, 9 N.J. 202 [87 A.2d 713, 718-719]; 20 A.L.R.2d 421, 451 et seq.)

The Foundation is a religious organization and plaintiff eoncededly has no property rights in it. His relationship to it, however, differs jn some respects from that of an ordinary church member. As we have seen, the membership of the Foundation is limited to three, and plaintiff was in a position to exert much greater influence on the management of the affairs of the group than could be exercised by a member of a congregation which is unlimited in size. Moreover, the personnel of the membership and directorship of the Foundation is identical, and plaintiff ceased to be a director when he was expelled as a member. A few courts have held that the action of a religious body in expelling an officer, such as a trustee, may be reviewed to the extent of determining whether there has been notice and hearing, whether the procedural rules of the organization have been followed, and whether the action was taken in good faith. (See Dittemore v. Dickey, 249 Mass. 95 [144 N.E. 57] ; In re Koch, 257 N.Y. 318 [178 N.E. 545, 546].) This is apparently the minority view, and we need not determine whether it should be followed in this state, because, if we assume it to be the correct rule, the record in this ease shows compliance with the requirements.

It appears that on April 26, 1950, Miss Liddecoat gave plaintiff a notice of cancellation of his membership and a letter of explanation referring to conduct on his part which had disturbed her. She had a lengthy conversation with him, and it may be inferred that they discussed the matters which caused her concern and that he fully understood the "objections to his conduct. At that time plaintiff told Miss Liddecoat that he had received no notice of a meeting called to consider termination of his membership. Thereafter the secretary gave plaintiff written notice that a special meeting of members would be held in California on August 21, 1950, to consider the cancellation of his membership. Plaintiff attended the meeting, after being assured that he would be paid his expenses in traveling from his home in Chicago. The minutes show that Miss Liddecoat read a prepared statement which recited what had been done in April with respect to plaintiff’s expulsion, and it may be inferred that the statement, which is not in the record, referred to the grounds for his expulsion. Miss Liddecoat, as president, called for a vote upon the cancellation of plaintiff’s membership, and he was expelled by a majority of the votes cast. Plaintiff did not vote, and, although the minutes state that he was not allowed to vote, Miss Liddecoat testified that there was no effort to restrain him from speaking or registering his disapproval. During the meeting he remained silent and made no attempt to oppose the action.

An organization such as the Foundation need not adhere to the strict requirements imposed in legal proceedings, and the form of procedure used is immaterial if there has been substantial compliance with the rules of the group and the accused member has been afforded a reasonable opportunity to defend himself. (See Cason v. Glass Bottle Blowers Assn., 37 Cal.2d 134, 143 [231 P.2d 6].) The rules of the Foundation were followed with respect to the August meeting at which plaintiff’s membership was cancelled, and the evidence shows that the grounds urged for his expulsion were fully explained to him prior to the meeting and that he had ample opportunity to be heard.

The evidence is clearly sufficient to permit an inference that the cancellation of plaintiff’s membership was made in good faith. It is apparent that the founders of the organization were of the opinion that harmony among the members was essential to the accomplishment of the purposes of the Foundation, and provision was made for the elimination of discord by permitting a member causing dissension to be removed by majority vote. Plaintiff made a number of suggestions which were disturbing to Miss Liddecoat, and it appears that his retention as a member would tend to disrupt the harmonious operation of the Foundation. There was evidence that his actions in and out of the meetings were inconsistent, and certain of his proposals appear to justify Miss Liddecoat’s conclusion that there was “a lot of self-interest” in the suggestions which he made concerning the operation of the association. During meetings he made favorable comments on .the way in which Mr. Webb, who was acting as general manager, conducted the affairs of the Foundation, but outside the meetings he urged the removal of Webb and the employment of himself as manager. He sought to purchase part of a ranch owned by the Foundation and to acquire a $25,000 mortgage which had been made by the Foundation to secure operating funds. Plaintiff held religious services in Chicago and had a radio program in Des Moines through which he solicited funds to carry on missionary work in South America. He proposed to make California the headquarters for the solicitation of funds and to “channel” the money collected through the Foundation. Plaintiff continually urged that the Foundation be used for this purpose although, according to the evidence, the solicitation of money was contrary to the plan of the founders. His conduct could, of course, be deemed inappropriate to one in his position and might well have tended to create disharmony and to interfere with the peaceful operation of the Foundation. The trial court could reasonably conclude that the cancellation of plaintiff’s membership was made in good faith with the honest belief that it would be in the best interests of the Foundation.

We come finally to plaintiff’s contention that a written request by A. M. Johnson that plaintiff be elected a director and that he have active management in ease of the death of Miss Liddeeoat was binding on the Foundation and prevented the termination of plaintiff’s membership. This request was in a paper which remained in A. M. Johnson’s files until after his death and was then presented at the special meeting at which plaintiff was elected a director. Even if we should assume that the request had any binding effect, it cannot be reasonably construed as exempting plaintiff from the provision of the by-laws authorizing cancellation of membership.

The judgment is affirmed.

Shenk, J., Edmonds, J,, Traynor, J., and Spence, J., concurred.

* Seetion 9500 of the Corporations Code provides: “Except as otherwise provided by the articles of incorporation or the by-laws, the powers of a nonprofit corporation shall be exercised, its property controlled, and its affairs conducted by a board of not less than three directors.”